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Repowering UK wind turbines: Key risk considerations

With the UK aiming to reach net zero by 2050, wind power is a crucial part of the strategy to transition to an electricity system with zero-carbon generation.
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By Murray Haynes , 

Power & Renewable Energy Practice, Marsh

03/10/2024 · 5 minute read

With the UK aiming to reach net zero by 2050, wind power is a crucial part of the strategy to transition to an electricity system with zero-carbon generation. Wind power made up 29.4% of the UK’s electricity generation in 2023, overtaking fossil fuels in 2024.

However, many wind turbines installed two decades ago are reaching the end of their design life, leaving owners with a choice between decommissioning their windfarms or repowering them — by upgrading key components or dismantling the old turbines and replacing them with new ones.

The potential for boosting electricity output, escalating costs of operating older turbines, and general social acceptance of windfarms may lead many owners to repower — despite the substantial investment required. There are risks associated with undertaking a repowering project, though, that those operating in the sector should consider.

What are the benefits of repowering wind turbines?

Repowering existing windfarms with cutting-edge turbines that generate significantly more power will help the UK meet its carbon emission targets. Conversely, closing sites or “sweating assets” — keeping older farms going as long as possible where operational costs are manageable — will materially dent the country’s renewable energy output. The advantages of repowering a windfarm also include:

  • New technologies can harness the wind resource more effectively, reducing the cost of electricity produced — benefiting both investors and consumers.
  • Windfarm owners can make use of previous investments. For example, existing infrastructure, such as control rooms, grids, transmission lines, substations, and roads can be repurposed in an upgrade.
  • New, larger turbines rotate more slowly than those built previously. This can help mitigate “flicker”, although longer blades may cast longer shadows. Flickering is the effect caused when rotating wind turbine blades periodically cast shadows through constrained openings such as the windows of houses or offices nearby. Advancements in turbine technology and design have also resulted in lower noise levels.
  • There is minimal necessity to expand existing locations, thereby reducing the impact of the repowering on people and the environment.
  • Subsidies are available to windfarm owners and developers who opt to repower via the Contracts for Difference (CfD) scheme — the UK Government’s main mechanism for supporting low carbon electricity generation. CfDs encourage investment in renewable energy by offering project developers, who face significant initial expenses and long operational lifetimes, safeguards against unpredictable wholesale prices. Additionally, CfDs shield consumers from bearing additional support costs during periods of high electricity prices. Tariff agreements supporting windfarms built before 2014 will have been struck under the prior Renewable Obligations Certificate regime. These remain valid for the duration of the agreement for the original asset, typically up to 20 years, but would be renegotiated under the CfD regime upon repowering.

What are the challenges of repowering a windfarm?

Construction issues: Owners or developers will have to contend with a similar range of construction risks when repowering a windfarm as with the original works. However, in many cases, repowering will employ higher output wind turbines. These will feature larger, heavier nacelles, the box-like structures sitting on top of wind turbines housing components necessary for converting wind energy into electricity. With larger generators come longer, heavier blades and a requirement for more substantial foundations and taller towers. Repowering, therefore, brings construction challenges in the form of dismantling the original asset and likely installation of larger, heavier replacements.

Transportation complications: Transporting the replacement equipment to windfarm sites can present major logistical difficulties. Transportation routes must be meticulously planned, often necessitating the temporary dismantling of traffic lights and other potential obstructions on route to the windfarms. Given blades are often manufactured overseas, there is scope for damage when they are transported from ship to shore.

Development risk: There will be a degree of development risk in any repowering project relating to obtaining planning permission and reaffirming acceptance from the local community. Even though there is broader acceptance of windfarms than perhaps existed two decades ago, the newer turbines have a much bigger footprint. And while repowering will result in fewer turbines on site — new, larger turbines will be positioned further apart than the smaller, older turbines — they will be taller with longer blades. Repowering projects may not, therefore, be perceived to reduce the visual intrusion of the windfarm. 

Supply chain, natural catastrophe, and other risks and considerations: There are risks associated with all construction works that equally apply to a windfarm repowering project. These include damage and project delays arising from natural peril such as flood or windstorm.  Rising costs of labour, materials, and equipment can also adversely affect project economics as can supply shortages which delay project completion. The repowering exercise itself will also require the owners to temporarily forgo the steady cash flow they earn from an operational asset.

Plan ahead for efficient repowering

Windfarm owners and developers can surmount these challenges with the help of experienced contractors, established technology, and effective project management.

Many of the risks associated with windfarm repowering projects can be managed and transferred onto the insurances markets. In common with the original construction of the windfarm, insurances are available to provide cover against physical damage occurring during the transit of equipment to site and its installation. Consequent revenue losses due to the delayed completion of the repowering project can also be insured, as may third party liability exposures.  

If repowering is to be undertaken on a phased basis, while some of the windfarm continues to operate, the insurance programme will need to be tailored to accommodate a mix of construction and operational phase exposures and insurance coverages.

Wind power owners and developers thinking about devising a strategic plan to deal with their aging assets are recommended to contact insurers at the earliest opportunity.

For more information on repowering, please contact your Marsh adviser.

 

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